Delaware | 001-15925 | 13-3893191 | ||
(State or other jurisdiction | (Commission File Number) | (I.R.S. Employer | ||
of incorporation) | Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240 .14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 | Results of Operations and Financial Condition |
ITEM 7.01 | Regulation FD Disclosure |
ITEM 9.01 | Financial Statements and Exhibits |
99.1 | Community Health Systems, Inc. Press Release dated April 23, 2009. |
2
Date: April 23, 2009 | COMMUNITY HEALTH SYSTEMS, INC. (Registrant) |
|||
By: | /s/ Wayne T. Smith | |||
Wayne T. Smith | ||||
Chairman of the Board,
President and Chief Executive Officer (principal executive officer) |
||||
By: | /s/ W. Larry Cash | |||
W. Larry Cash | ||||
Executive Vice President, Chief Financial Officer
and Director
(principal financial officer) |
||||
By: | /s/ T. Mark Buford | |||
T. Mark Buford | ||||
Vice President and Corporate Controller
(principal accounting officer) |
3
Exhibit Number | Description | |
99.1
|
Press Release dated April 23, 2009 |
4
Investor Contact: | W. Larry Cash Executive Vice President and Chief Financial Officer (615) 465-7000 |
Three Months Ended | ||||||||
March 31, | ||||||||
2009 | 2008 (h) | |||||||
Net operating revenues |
$ | 2,892,390 | $ | 2,688,924 | ||||
Adjusted EBITDA (d) |
$ | 403,593 | $ | 377,500 | ||||
Income from continuing operations (e)(h) |
$ | 71,131 | $ | 59,119 | ||||
Net income attributable to Community Health Systems, Inc. |
$ | 58,915 | $ | 60,127 | ||||
Income from continuing operations attributable to Community
Health Systems, Inc. common stockholders per share: |
||||||||
Basic (a) |
$ | 0.63 | $ | 0.53 | ||||
Diluted (a) |
$ | 0.63 | $ | 0.52 | ||||
Net income attributable to Community Health Systems, Inc.
common stockholders per share: |
||||||||
Basic |
$ | 0.65 | $ | 0.64 | ||||
Diluted |
$ | 0.65 | $ | 0.63 | ||||
Weighted-average number of shares outstanding: |
||||||||
Basic (g) |
90,605 | 94,108 | ||||||
Diluted (g) |
90,885 | 95,007 | ||||||
Net cash provided by operating activities |
$ | 259,427 | $ | 55,133 |
For footnotes, see pages 9 and 10. |
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
% of Net | % of Net | |||||||||||||||
Operating | Operating | |||||||||||||||
Amount | Revenue | Amount | Revenue | |||||||||||||
Net operating revenues |
$ | 2,892,390 | 100.0 | % | $ | 2,688,924 | 100.0 | % | ||||||||
Operating costs and expenses: |
||||||||||||||||
Salaries and benefits |
1,164,144 | 40.2 | % | 1,076,301 | 40.0 | % | ||||||||||
Provision for bad debts |
335,451 | 11.6 | % | 289,702 | 10.8 | % | ||||||||||
Supplies |
402,454 | 13.9 | % | 380,676 | 14.2 | % | ||||||||||
Other operating expenses |
539,724 | 18.6 | % | 518,966 | 19.3 | % | ||||||||||
Rent |
59,943 | 2.1 | % | 58,663 | 2.2 | % | ||||||||||
Depreciation and amortization |
135,532 | 4.7 | % | 121,270 | 4.5 | % | ||||||||||
Total operating costs and expenses |
2,637,248 | 91.1 | % | 2,445,578 | 91.0 | % | ||||||||||
Income from operations (h) |
255,142 | 8.9 | % | 243,346 | 9.0 | % | ||||||||||
Interest expense, net |
163,810 | 5.7 | % | 164,527 | 6.1 | % | ||||||||||
(Gain) loss from early extinguishment of debt (e) |
(2,412 | ) | 0.1 | % | 1,328 | 0.0 | % | |||||||||
Equity in earnings of unconsolidated affiliates |
(12,919 | ) | 0.4 | % | (12,884 | ) | 0.5 | % | ||||||||
Income from
continuing operations before income taxes |
106,663 | 3.7 | % | 90,375 | 3.4 | % | ||||||||||
Provision for income taxes |
35,532 | 1.2 | % | 31,256 | 1.2 | % | ||||||||||
Income from continuing operations (h)(e) |
71,131 | 2.5 | % | 59,119 | 2.2 | % | ||||||||||
Discontinued operations, net of taxes: |
||||||||||||||||
Income from operations of hospitals sold and
hospitals held for sale (f) |
2,175 | 0.0 | % | | 0.0 | % | ||||||||||
(Loss) gain on sale of hospitals, net |
(405 | ) | 0.0 | % | 9,617 | 0.4 | % | |||||||||
Income from discontinued operations |
1,770 | 0.0 | % | 9,617 | 0.4 | % | ||||||||||
Net income |
72,901 | 2.5 | % | 68,736 | 2.6 | % | ||||||||||
Less: Net income attributable to noncontrolling interests*(a) |
13,986 | 0.5 | % | 8,609 | 0.4 | % | ||||||||||
Net income attributable to Community Health Systems, Inc. |
$ | 58,915 | 2.0 | % | $ | 60,127 | 2.2 | % | ||||||||
Income from continuing operations attributable to Community
Health Systems, Inc. common stockholders per share: |
||||||||||||||||
Basic * |
$ | 0.63 | $ | 0.53 | ||||||||||||
Diluted * |
$ | 0.63 | $ | 0.52 | ||||||||||||
Discontinued operations attributable to Community Health
Systems, Inc. common stockholders per share: |
||||||||||||||||
Basic * |
$ | 0.02 | $ | 0.11 | ||||||||||||
Diluted * |
$ | 0.02 | $ | 0.11 | ||||||||||||
Net income attributable to Community Health Systems, Inc.
common stockholders per share: |
||||||||||||||||
Basic |
$ | 0.65 | $ | 0.64 | ||||||||||||
Diluted |
$ | 0.65 | $ | 0.63 | ||||||||||||
Weighted-average number of shares
outstanding(g): |
||||||||||||||||
Basic |
90,605 | 94,108 | ||||||||||||||
Diluted |
90,885 | 95,007 | ||||||||||||||
Continued on the next page. |
- MORE -
* | On January 1, 2009, the Company adopted Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements an Amendment of ARB No. 51, the provisions of which, among others, require that minority interests be renamed noncontrolling interests and that a company present a consolidated net income measure that includes the amounts attributable to both the controlling and noncontrolling interests for all periods presented. Refer to footnote (a) on page 9, for information needed to recalculate income per share adjusted for noncontrolling interests. | |
For footnotes, see pages 9 and 10. |
- MORE -
For the Three Months Ended March 31, | ||||||||||||||||||||||||
Consolidated | Same-Store | |||||||||||||||||||||||
2009 | 2008 | % Change | 2009 | 2008 | % Change | |||||||||||||||||||
Number of hospitals (at end of period) |
119 | 116 | 116 | 116 | ||||||||||||||||||||
Licensed beds (at end of period) |
17,276 | 16,711 | 16,692 | 16,711 | ||||||||||||||||||||
Beds in service (at end of period) |
15,126 | 14,499 | 14,571 | 14,499 | ||||||||||||||||||||
Admissions |
170,886 | 174,733 | -2.2 | % | 166,204 | 174,733 | -4.9 | % | ||||||||||||||||
Adjusted admissions |
306,686 | 306,143 | 0.2 | % | 298,722 | 306,138 | -2.4 | % | ||||||||||||||||
Patient days |
734,727 | 759,897 | -3.3 | % | 713,299 | 759,897 | -6.1 | % | ||||||||||||||||
Average length of stay (days) |
4.3 | 4.3 | 4.3 | 4.3 | ||||||||||||||||||||
Occupancy rate (average beds in service) |
54.0 | % | 57.5 | % | 53.8 | % | 57.5 | % | ||||||||||||||||
Net operating revenues |
$ | 2,892,390 | $ | 2,688,924 | 7.6 | % | $ | 2,805,202 | $ | 2,688,798 | 4.3 | % | ||||||||||||
Net
inpatient revenue as a % of total net operating revenues |
52.0 | % | 52.9 | % | 51.7 | % | 52.9 | % | ||||||||||||||||
Net outpatient revenue as a % of
total net operating revenues |
48.0 | % | 47.1 | % | 48.3 | % | 47.1 | % | ||||||||||||||||
Income from operations (h) |
$ | 255,142 | $ | 243,346 | 4.8 | % | $ | 260,042 | $ | 243,408 | 6.8 | % | ||||||||||||
Income from operations as a
% of net operating revenues |
8.9 | % | 9.0 | % | 9.3 | % | 9.1 | % | ||||||||||||||||
Depreciation and amortization |
$ | 135,532 | $ | 121,270 | $ | 133,754 | $ | 121,270 | ||||||||||||||||
Equity in earnings of unconsolidated affiliates |
$ | 12,919 | $ | 12,884 | $ | 12,919 | $ | 12,884 | ||||||||||||||||
Liquidity Data: |
||||||||||||||||||||||||
Adjusted EBITDA (d) |
$ | 403,593 | $ | 377,500 | 6.9 | % | ||||||||||||||||||
Adjusted EBITDA as a % of net
operating revenues |
14.0 | % | 14.0 | % | ||||||||||||||||||||
Net cash provided by operating activities |
$ | 259,427 | $ | 55,133 | ||||||||||||||||||||
Net cash provided by operating activities as
a % of net operating revenue |
9.0 | % | 2.1 | % |
| Continuing operating results and statistical data exclude discontinued operations for all periods presented. | |
For footnotes, see pages 9 and 10. |
- MORE -
March 31, | December 31, | |||||||
2009 | 2008 | |||||||
ASSETS |
||||||||
Current assets
|
||||||||
Cash and cash equivalents |
$ | 532,132 | $ | 220,655 | ||||
Patient accounts receivable, net of allowance for doubtful accounts
of $1,194,834
and $1,102,900 at March 31, 2009, and December 31, 2008, respectively |
1,643,919 | 1,613,959 | ||||||
Supplies |
275,380 | 272,937 | ||||||
Prepaid income taxes |
| 92,710 | ||||||
Deferred income taxes |
91,875 | 91,875 | ||||||
Prepaid expenses and taxes |
88,717 | 72,900 | ||||||
Other current assets |
195,113 | 240,014 | ||||||
Total current assets |
2,827,136 | 2,605,050 | ||||||
Property and equipment |
7,191,931 | 7,082,930 | ||||||
Less accumulated depreciation and amortization |
(1,323,638 | ) | (1,213,871 | ) | ||||
Property and equipment, net |
5,868,293 | 5,869,059 | ||||||
Goodwill |
4,173,408 | 4,166,091 | ||||||
Other assets, net |
1,045,529 | 1,178,054 | ||||||
Total assets |
$ | 13,914,366 | $ | 13,818,254 | ||||
LIABILITIES |
||||||||
Current liabilities
|
||||||||
Current maturities of long-term debt |
$ | 32,672 | $ | 29,462 | ||||
Accounts payable |
465,393 | 529,429 | ||||||
Current income taxes payable |
17,668 | | ||||||
Deferred income taxes |
6,740 | 6,740 | ||||||
Accrued interest |
83,103 | 152,228 | ||||||
Accrued liabilities |
797,432 | 816,111 | ||||||
Total current liabilities |
1,403,008 | 1,533,970 | ||||||
Long-term debt |
9,074,952 | 8,937,984 | ||||||
Deferred income taxes |
461,098 | 460,793 | ||||||
Other long-term liabilities |
890,237 | 887,445 | ||||||
Total liabilities |
11,829,295 | 11,820,192 | ||||||
Redeemable noncontrolling interests in equity of consolidated subsidiaries(a) |
306,942 | 298,763 | ||||||
EQUITY(a) |
||||||||
Community Health Systems, Inc. stockholders equity |
||||||||
Preferred stock, $.01 par value per share, 100,000,000 shares authorized;
none issued |
| | ||||||
Common stock, $.01 par value per share, 300,000,000 shares authorized;
93,434,063 shares issued and 92,479,260 shares outstanding
at March 31, 2009, and 92,483,166 shares issued and 91,507,617 shares
outstanding at December 31, 2008 |
934 | 925 | ||||||
Additional paid-in capital |
1,153,498 | 1,151,119 | ||||||
Treasury stock, at cost, 975,549 shares at March 31, 2009 and
December 31, 2008 |
(6,678 | ) | (6,678 | ) | ||||
Accumulated other comprehensive loss |
(283,475 | ) | (295,575 | ) | ||||
Retained earnings |
835,164 | 776,249 | ||||||
Total Community Health Systems, Inc. stockholders equity |
1,699,443 | 1,626,040 | ||||||
Noncontrolling interests in equity of consolidated subsidiaries(a) |
78,686 | 73,259 | ||||||
Total equity |
1,778,129 | 1,699,299 | ||||||
Total liabilities and equity |
$ | 13,914,366 | $ | 13,818,254 | ||||
For footnotes, see pages 9 and 10. |
Three Months Ended | ||||||||
March 31, | ||||||||
2009 | 2008 | |||||||
Cash flows from operating activities |
||||||||
Net income attributable to Community Health Systems, Inc. |
$ | 58,915 | $ | 60,127 | ||||
Adjustments to reconcile net income attributable to Community |
||||||||
Health Systems, Inc. to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
135,894 | 122,478 | ||||||
Stock-based compensation expense |
12,286 | 13,246 | ||||||
Excess tax benefits relating to stock-based compensation |
| 947 | ||||||
(Gain) loss on early extinguishment of debt |
(2,412 | ) | 1,328 | |||||
Net income attributable to noncontrolling interests |
13,986 | 8,609 | ||||||
(Gain) loss on sale of hospitals and partnership interest, net |
405 | (12,885 | ) | |||||
Other non-cash (income) expenses, net |
(4,489 | ) | 1,442 | |||||
Changes in operating assets and liabilities, net of effects of acquisitions
and divestitures: |
||||||||
Patient accounts receivable |
(18,013 | ) | (100,057 | ) | ||||
Supplies, prepaid expenses and other current assets |
(7,592 | ) | (26,584 | ) | ||||
Accounts payable, accrued liabilities and income taxes |
68,170 | (81,965 | ) | |||||
Other |
2,277 | 68,447 | ||||||
Net cash provided by operating activities |
259,427 | 55,133 | ||||||
Cash flows from investing activities |
||||||||
Acquisitions of facilities and other related equipment |
(17,053 | ) | (1,705 | ) | ||||
Purchases of property and equipment |
(136,021 | ) | (141,693 | ) | ||||
Proceeds from disposition of hospitals and other ancillary operations |
89,909 | 365,680 | ||||||
Proceeds from sale of property and equipment |
326 | 13,717 | ||||||
Increase in other non-operating assets |
(36,344 | ) | (98,182 | ) | ||||
Net cash (used in) provided by investing activities |
(99,183 | ) | 137,817 | |||||
Cash flows from financing activities |
||||||||
Proceeds from exercise of stock options |
| 94 | ||||||
Deferred financing costs |
(57 | ) | (2,232 | ) | ||||
Excess tax benefits relating to stock-based compensation |
| (947 | ) | |||||
Proceeds from noncontrolling investors in joint ventures |
21,922 | 12,881 | ||||||
Redemption of noncontrolling investments in joint ventures |
(167 | ) | | |||||
Distributions to noncontrolling investors in joint ventures |
(6,595 | ) | (7,524 | ) | ||||
Borrowings under credit agreement |
200,000 | 25,000 | ||||||
Repayments of long-term indebtedness |
(63,870 | ) | (188,743 | ) | ||||
Net cash provided by (used in) financing activities |
151,233 | (161,471 | ) | |||||
Net change in cash and cash equivalents |
311,477 | 31,479 | ||||||
Cash and cash equivalents at beginning of period |
220,655 | 132,874 | ||||||
Cash and cash equivalents at end of period |
$ | 532,132 | $ | 164,353 | ||||
For footnotes, see pages 9 and 10. |
(a) | On January 1, 2009, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 160, Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No. 51, the provisions of which, among other things, requires that minority interests be renamed noncontrolling interests and that a company present a consolidated net income measure that includes the amounts attributable to both the controlling and noncontrolling interests for all periods presented. The following table provides information needed to recalculate income per share adjusted for noncontrolling interests. |
Three Months Ended | ||||||||
March 31, | ||||||||
2009 | 2008 | |||||||
Income from continuing operations attributable to Community |
||||||||
Health Systems, Inc. common stockholders: |
||||||||
Income from continuing operations, net of tax |
$ | 71,131 | $ | 59,119 | ||||
Less: Income from continuing operations attributable to
noncontrolling interests, net of tax |
(14,131 | ) | (9,292 | ) | ||||
Income from continuing operations attributable to Community |
||||||||
Health Systems, Inc. common stockholders basic and diluted |
$ | 57,000 | $ | 49,827 | ||||
Income from discontinued operations attributable to Community |
||||||||
Health Systems, Inc. common stockholders: |
||||||||
Income from discontinued operations, net of tax |
$ | 1,770 | $ | 9,617 | ||||
Plus: Loss from discontinued operations attributable to
noncontrolling interests, net of tax |
145 | 683 | ||||||
Income from discontinued operations attributable to Community |
||||||||
Health Systems, Inc. common stockholders basic and diluted |
$ | 1,915 | $ | 10,300 | ||||
For the balance sheet presentation, SFAS No. 160 requires that minority interests be renamed noncontrolling interests and that a company present such noncontrolling interests as a component of equity for all periods presented, except for the redeemable noncontrolling interests, which are presented as a component of mezzanine equity. | ||
(b) | Continuing operating results exclude discontinued operations for all periods presented. | |
(c) | On March 31, 2009, the Company completed the settlement of all pending litigation that resulted in the conveyance by two of the Companys indirect subsidiaries of their 80% partnership interest in the partnership that owns Presbyterian Hospital of Denton located in Denton, Texas, to the minority partner of that partnership for approximately $100 million. For 2008, the Denton, Texas, hospital had net revenues of approximately $150 million with an EBITDA margin in the double digits. This hospital has been reclassified to discontinued operations for all periods presented. | |
(d) | EBITDA consists of net income attributable to Community Health Systems, Inc. before interest, income taxes, and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted to exclude discontinued operations, gain/loss from early extinguishment of debt and net income attributable to noncontrolling interests. The Company has from time to time sold noncontrolling interests in certain of its subsidiaries or acquired subsidiaries with existing noncontrolling interest ownership positions. The Company believes that it is useful to present adjusted EBITDA because it excludes the portion of EBITDA attributable to these third party interests and clarifies for investors the Companys portion of EBITDA generated by continuing operations. The Company uses adjusted EBITDA as a measure of liquidity. The Company has included this measure because it believes it provides investors with additional information about the Companys ability to incur and service debt and make capital expenditures. Adjusted EBITDA is the basis for a key component in the determination of the Companys compliance with some of the covenants under the Companys senior secured credit facility, as well as to determine the interest rate and commitment fee payable under the senior secured credit facility. | |
Adjusted EBITDA is not a measurement of financial performance or liquidity under generally accepted accounting principles. It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles. The items excluded from adjusted EBITDA are significant components in understanding and evaluating financial performance and liquidity. This calculation of adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. |
Footnotes continued on the next page. |
- MORE -
The following table reconciles adjusted EBITDA, as defined, to net cash provided by operating activities as derived directly from the consolidated financial statements for the three months ended March 31, 2009 and 2008 (in thousands): |
Three Months Ended | ||||||||
March 31, | ||||||||
2009 | 2008 | |||||||
Adjusted EBITDA |
$ | 403,593 | $ | 377,500 | ||||
Interest expense, net |
(163,810 | ) | (164,527 | ) | ||||
Provision for income taxes |
(35,532 | ) | (31,256 | ) | ||||
Income from operations of hospitals sold
and hospitals held for sale, net of taxes |
2,175 | | ||||||
Other non-cash expenses, net |
8,159 | 13,575 | ||||||
Net changes in operating assets and liabilities,
net of effects of acquisitions |
44,842 | (140,159 | ) | |||||
Net cash provided by operating activities |
$ | 259,427 | $ | 55,133 | ||||
(e) | Included in income from continuing operations for the three months ended March 31, 2009, is a gain from early extinguishment of debt of $2.4 million with an after-tax impact of $1.5 million related to the repurchases on the open market and cancellation of $60.5 million of Senior Notes. Included in income from continuing operations for the three months ended March 31, 2008, is a loss from early extinguishment of debt of $1.3 million with an after-tax impact of $0.9 million related to the repurchases on the open market and cancellation of $62.7 million of Senior Notes and a pre-tax gain of $2.6 million with an after-tax impact of $1.7 million from the sale of some excess land previously held by the company. | |
(f) | Included in discontinued operations are the following: |
| Presbyterian Hospital of Denton (255 licensed beds) located in Denton, Texas, which was conveyed to the noncontrolling partner on March 31, 2009; | ||
| One hospital classified as being held for sale at March 31, 2009; and, | ||
| Russell County Medical Center (78 licensed beds) located in Lebanon, Virginia, nine hospitals with an aggregate total of 1,058 licensed beds located in Alabama, Arkansas, Missouri, Oregon and Tennessee, and one hospital located in the Republic of Ireland (122 licensed beds), all of which were sold during the first quarter of 2008. |
(g) | The following table sets forth components reconciling the basic weighted-average number of shares to the diluted weighted-average number of shares: |
Three Months Ended | ||||||||
March 31, | ||||||||
2009 | 2008 | |||||||
Weighted-average number of shares
outstanding basic |
90,605 | 94,108 | ||||||
Add effect of dilutive securities: |
||||||||
Stock awards and options |
280 | 899 | ||||||
Weighted-average number of shares
outstanding diluted |
90,885 | 95,007 | ||||||
(h) | Included in income from operations and income from continuing operations for the three months ended March 31, 2009, are the following non-same-store charges: |
| A pre-tax charge of $1.0 million related to acquisition costs required to be expensed pursuant to revised business combination accounting rules that became effective January 1, 2009; and, | ||
| A pre-tax charge of $2.2 million for system conversion costs related to conversion of Triads former IT systems to the Companys IT system. |
- MORE -
Updated 2009 | ||||||||||||
Projection | ||||||||||||
Range | ||||||||||||
Net operating revenues (in millions) |
$ | 11,650 | to | $ | 11,950 | |||||||
Adjusted EBITDA (in millions) |
$ | 1,625 | to | $ | 1,665 | |||||||
Income from continuing operations per share diluted |
$ | 2.45 | to | $ | 2.65 | |||||||
Same hospitals annual admissions/adjusted admissions growth |
-1.0 | % | to | 1.0 | % | |||||||
Weighted-average diluted shares (in millions) |
92.0 | to | 94.0 | |||||||||
Acquisitions of new hospitals |
2 | |||||||||||
Income from Continuing Operations Per Share Diluted |
||||||||||||
2nd quarter ending June 30 |
$ | 0.58 | to | $ | 0.64 | |||||||
3rd quarter ending September 30 |
$ | 0.58 | to | $ | 0.64 | |||||||
4th quarter ending December 31 |
$ | 0.66 | to | $ | 0.74 |
| Includes the recent divesture of the Denton, Texas hospital and one hospital currently held for sale; no additional operating divestitures have been assumed in this guidance. | |
| Projected 2009 same hospital annual admissions/adjusted admissions growth does not consider unanticipated service closures and other unusual events. | |
| The Companys guidance does not take into account any resolution of the New Mexico qui tam case (U.S. ex rel. Baker vs. Community Health Systems, Inc.) in which it is alleged that the Company and three of the Companys New Mexico hospitals have caused the State of New Mexico to submit improper claims for federal funds in violation of the Federal False Claims Act. The Company is vigorously defending this litigation. | |
| Expressed as a percentage of net operating revenues, the provision for bad debts is projected to be approximately 11.8% to 12.5% for 2009. These percentages may vary depending on changes in payor mix. | |
| Expressed as a percent of net operating revenues, depreciation and amortization is projected to be approximately 4.5% to 4.8% for 2009; however, this is a fixed cost and the percentages may vary as revenue varies. | |
| 2009 projection assumes an estimate of $0.02 to $0.03 per share (diluted) of acquisition costs will be expensed pursuant to revised business combination accounting rules that became effective January 1, 2009. |
- MORE -
| For the purpose of providing interest expense guidance, the Company assumes that the borrowing rate under the Companys $7.215 billion Senior Secured Credit Facility for 2009 will remain relatively stable as compared to 2008; however, additional swap agreements could increase interest expense based on current market conditions. Based on these assumptions, expressed as a percentage of net operating revenue, interest expense is projected to be approximately 5.5% to 5.7% for 2009; however, these percentages will vary as revenue and interest rates vary. | |
| Expressed as a percentage of net operating revenues, net income attributable to noncontrolling interests is projected to be approximately 0.4% to 0.6% for 2009. | |
| On December 13, 2006, the Company announced a new open market repurchase program for up to five million shares of the Companys common stock not to exceed $200 million in purchases. This repurchase program will conclude at the earlier of three years or when the maximum number of shares has been repurchased or the maximum dollar amount has been reached. Through April 22, 2009, 4.8 million shares have been purchased under this repurchase plan. No additional share purchases have been assumed for 2009. From January 1, 2009 through April 22, 2009, the Company repurchased on the open market and cancelled $80.5 million of principal amount of its Senior Notes ($60.5 million as of March 31, 2009) and paid off and retired $110 million of principal amount of its Term Loans under the Companys Credit Facility. It is currently assumed that approximately $100 million of principal amount of additional Senior Note repurchases will be completed during the remainder of 2009. | |
| Expressed as a percentage of income from continuing operations before income taxes, provision for income tax is projected to be approximately 33.0% to 34.5% for 2009. The adoption of Statement of Financial Accounting Standards No. 160 and the related presentation of noncontrolling interests outside of income from continuing operations caused the effective tax rate to be lower than previously projected. | |
| Capital expenditures are projected as follows (in millions): |
2009 | ||||
Guidance | ||||
Total |
$600 to $650 |
| Net cash provided by operating activities are projected as follows (in millions): |
2009 | ||||
Guidance | ||||
Total |
$900 to $1,000 |
| Included in the above guidance are estimated 2.5% to 3.0% increases in Medicare inpatient reimbursement effective October 1, 2008, and Medicare outpatient reimbursement effective January 1, 2009. The guidance does not reflect any state Medicaid legislation not enacted to date or any state discount program not implemented to date. The 2009 guidance does include a net operating revenue reduction of 0.10% of calender year 2009 net operating revenue for the estimated impact of the implementation of an outpatient prospective payment system under the TRICARE/CHAMPUS program, which will be effective in the second quarter of 2009. |
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| general economic and business conditions, both nationally and in the regions in which we operate; | |
| our ability to successfully integrate any acquisitions or to recognize expected synergies from such acquisitions, including the facilities acquired from Triad; | |
| risks associated with our substantial indebtedness, leverage and debt service obligations; | |
| demographic changes; | |
| changes in, or the failure to comply with, governmental regulations; | |
| legislative proposals for healthcare reform; | |
| potential adverse impact of known and unknown government investigations and Federal and State False Claims Act litigation; | |
| our ability, where appropriate, to enter into and maintain managed care provider arrangements and the terms of these arrangements; | |
| changes in inpatient or outpatient Medicare and Medicaid payment levels; | |
| increases in the amount and risk of collectability of patient accounts receivable; | |
| increases in wages as a result of inflation or competition for highly technical positions and rising supply costs due to market pressure from pharmaceutical companies and new product releases; | |
| liability and other claims asserted against us, including self-insured malpractice claims; | |
| competition; | |
| our ability to attract and retain without significant employment costs, qualified personnel, key management, physicians, nurses and other health care workers; | |
| trends toward treatment of patients in less acute or specialty healthcare settings, including ambulatory surgery centers or specialty hospitals; | |
| changes in medical or other technology; | |
| changes in generally accepted accounting principles; | |
| the availability and terms of capital to fund additional acquisitions or replacement facilities; | |
| our ability to successfully acquire additional hospitals and complete the sale of hospitals held for sale; | |
| our ability to obtain adequate levels of general and professional liability insurance; | |
| timeliness of reimbursement payments received under government programs; and | |
| the other risk factors set forth in our public filings with the Securities and Exchange Commission. |
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